Use the Following to Answer Questions

question 30

Multiple Choice

Use the following to answer questions:
The reserve requirement is 20%.Leroy receives $1000 as a graduation present and deposits the money in his chequing account.The bank does NOT want to hold excess reserves.
-(Scenario: Money Creation) Refer to Scenario: Money Creation.What is the maximum possible expansion in the money supply as a result of this initial deposit?

• A) $1000
• B) $1800
• C) $4000
• D) $5000